Following in the footsteps of their former leader Eric Holder, federal and state prosecutors are getting ready to let off another massive education fraud scam without anyone getting jail time. To sweeten the deal, it looks like prosecutors are going to leave the students who the institutions defrauded responsible for their student loans.
As the Huffington Post reports:
Federal and state prosecutors are poised to announce a settlement with Education Management Corporation, one of the nation’s largest for-profit college chains, that would resolve allegations it defrauded taxpayers out of $11 billion, according to people familiar with the case.
The settlement, which may be announced as soon as Monday, is likely to require Education Management to pay roughly $100 million — less than 1 percent of the federal student aid the U.S. Department of Justice and about a dozen state attorneys general allege the company fraudulently claimed from 2003 to 2011. Under the False Claims Act, the federal government could recover three times the amount, or $33 billion, plus additional penalties.
The government will not, however, be holding the institution to answer to the full extent of the law. Instead the Education Management, reports indicate, will be allowed to deny any wrongdoing in the settlement. A legal maneuver where the institution gets to end the government’s case, but it never has to admit it actually did anything wrong. And that creates a big problem for students that Education Management took advantage of.
Again, the Huffington Post:
That detail is likely to hinder former students wishing to immediately discharge their federal debts. Federal law allows defrauded student loan borrowers to petition the Education Department to cancel their loans if they were defrauded into taking out the debt. But unless the Education Department conducts its own investigation, it has signaled that it wants admissions of wrongdoing or findings by judges before discharging federal student loans.
So while the case may be resolved, it will be resolved for pennies on the dollar and the students, who were the real victims of these white collar crooks, will be left to pay for the debt they were deceived into taking.
For more on this, read the article from the Huffington Post titled: “Massive Settlement Coming In For-Profit College Fraud Case.“
